Washington employers can receive $29 million tax break - Jan. 24, 2007

07-007

Media contact: Bill Tarrow, 360-902-9376

Audio: http://fortress.wa.gov/esd/portal/info/newsroom/audiofiles/audio/

OLYMPIA – Washington employers who applied for tax credits in 2006 for hiring veterans, ex-offenders and other hard-to-place job seekers can now cash in on an estimated $29 million tax break, thanks to a new federal law. 

The bill approved by Congress and the President reauthorizes the expired Work Opportunity Tax Credit and the Welfare-to-Work tax credit retroactively to Jan. 1, 2006, and through 2007.  The tax credits are obtained by submitting an application to the Washington State Employment Security Department, which works with other government agencies to certify the eligibility of hired workers. 

The tax-credit program provides up to $2,400 in tax savings to businesses who hire veterans, the disabled, ex-offenders, high-risk youths, food-stamp recipients and individuals on Supplemental Security Income.  Additionally, businesses who hire welfare recipients can save as much as $9,000 over the two years.  The savings are deducted from businesses’ federal income taxes.

“Creating a strong, balanced economy means looking out equally for businesses and workers,” said Karen Lee, commissioner for the Employment Security Department.  “The Work Opportunity Tax Credit does that by rewarding businesses that provide jobs to disadvantaged people.” 

In 2006, Employment Security received more than 31,000 applications for the credits from 2,900 Washington businesses.  The department has reviewed approximately 19,000 of the applications and now has begun to issue eligibility determinations.  Businesses certified for tax credits must complete IRS Form 5884 for the Work Opportunity Tax Credit or IRS Form 8861 for the Welfare-to-Work credit when submitting their federal income taxes.  

Johnny Singh, manager for Mass Brokerage LLC in Roy, was pleased to learn that the program was reauthorized. 

“We have hired a number of people and have not only gotten good employees, but have saved a lot of money,” said Singh.  “We’re looking forward to increasing those numbers this year and in the future.” 

The new law extends the tax credits through December 2007.  Businesses interested in learning more about the tax credit or about identifying qualifying job candidates should contact their nearest WorkSource office or call 800-669-9271. 

In other news important to businesses last month, Employment Security announced that state unemployment-insurance taxes will drop by an average of 13 percent in 2007, representing a $58.4 million savings to Washington businesses.

Further, the department is supporting Gov. Chris Gregoire’s legislative proposal to lower the tax rate for new businesses by 15 percent, which would reap an additional $9 million a year in savings to those businesses.

Web Links
Locations of WorkSource offices

Resources for job seekers and businesses, including a searchable database of job listings

Information on occupations, wages and other economic trends